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London sales 'driving' house prices

Sales of London property are continuing to drive up house prices elsewhere in the country, according to the government's Land Registry.The average price of a home in the capital reached £335,658 in May, compared to £180,594 for the rest of England and Wales, the agency said.As a result the registry's monthly house price index was pushed up to 219.6 points – a level which represents an annual increase of 8.9 per cent and a 0.7 per cent rise on April's average price of £179,935.The divergence in house price growth between London and the rest of England and Wales continues to sit at over six per cent – the greatest gap in two years, the Land Registry added.Analysts are likely to interpret the data as a further sign that Bank of England policymakers will act to raise interest rates again in a bid to stem property price inflation.In a separate survey published today the Nationwide building society revealed that the annual rate of house price growth reached 11.1 per cent in June, the highest level since January 2005.Bank of England governor Mervyn King subsequently told a parliamentary committee this morning that the balance of risks to the outlook for inflation remain "to the upside".However addressing the treasury select committee he did concede that housing market activity was showing further signs of slowing and that consumer spending might be softening.Data published by the Land Registry showed that all regions in England and Wales experienced house price growth last month, with London recording the biggest annual increase at 15.3 per cent.House prices rose the slowest in the north-east, where they rose by 4.8 per cent on an annual basis.

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